ch 1 t/f
A retained earnings statement reports all changes in cash for a period of time.
false
About 90% of the businesses in the United States are organized as corporations.
false
An account receivable is typically classified as a revenue.
false
An example of a general-purpose financial statement would be a report about projected price increases related to transportation costs.
false
Cash dividends paid to stockholders decrease assets and increase equity.
false
Managerial accounting information is used by external and internal users equally.
false
Net income and net profit do not mean the same thing.
false
No significant differences exist between the accounting standards issued by the FASB and the IASB.
false
Only large companies such as Wal-Mart, JCP, General Motors, and the Bank of America can be organized as corporations.
false
Owners' rights to assets rank ahead of creditors' rights to assets.
false
Paying an account payable increases liabilities and decreases assets.
false
Proper ethical conduct implies that you only consider what's in your best interest
false
Proprietorships are owned by one owner and provide only services to their customers.
false
Purchasing supplies on account increases liabilities and decreases equity.
false
Receiving a bill or otherwise being notified that an amount is owed is not recorded until the amount is paid.
false
Receiving payments on an account receivable increases both equity and assets.
false
Revenue is earned only when money is received.
false
Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the companies where they work.
false
The excess of revenue over the expenses incurred in earning the revenue is called capital stock.
false
The main objective for all businesses is to maximize unrealized profits.
false
The main objective of a not-for-profit business is not to make a profit.
false
The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities
false
The statement of cash flows consists of three sections: cash flows from operating activities, cash flows from income activities, and cash flows from equity activities.
false
Two factors that typically lead to ethical violations are relevance and timeliness of accounting information.
false
An income statement is a summary of the revenues and expenses of a business as of a specific date.
fasle
The principal financial statements for a corporation are the income statement, the retained earnings statement, the balance sheet, and the budget.
fasle
A business is an organization in which basic resources or inputs, like materials and labor, are assembled and processed to provide outputs in the form of goods or services to customers.
true
A corporation is a business that is legally separate and distinct from its owners.
true
Accounting information users need reports about the economic activities and condition of businesses.
true
All financial statements are identified by the name of the business, the title of the statement, and the date or period of time
true
An account receivable is a claim against a customer arising from a sale on account.
true
An example of an external user of accounting information is the federal government
true
Expenses are assets that are used up during the process of earning revenue.
true
Financial accounting provides information to all users, while the main focus for managerial accounting is to provide information to the management.
true
Generally accepted accounting principles regulate how and what financial information is reported by businesses.
true
Some of the major fraudulent acts by senior executives started as what they considered to be small ethical lapses which grew out of control.
true
The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility for developing accounting principles
true
The Sarbanes-Oxley Act prohibits CPAs from providing nonaudit investment banking services.
true
The accounting equation can be expressed as Assets - Liabilities = Owners' Equity.
true
The balance sheet represents the accounting equation.
true
The basic difference between manufacturing and merchandising companies is the completion level of the products they purchase for resale to customers.
true
The cost concept is the basis for entering the exchange price into the accounting records.
true
The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of owners.
true
The role of accounting is to provide many different users with financial information to make economic decisions.
true
The unit of measurement concept requires that economic data be recorded in a common unit of measurement.
true
